What is Dropshipping & how does it work?

Statistics by Grandview Research show that the market size of Dropshipping business globally was valued at 102.2bn and the industry is estimated to grow at a CAGR of 28.8% in the period from 2019-2025.

Dropshipping is a business model that is becoming increasingly popular after aliexpress solution as it enables you to run an eCommerce business without the hassles that it comes with. If you are an aspiring entrepreneur, Dropshipping is for you!

With Dropshipping, there are 3 steps involved:

- Customer visits and places an order on an online store

- The online store owner communicates the details of the order to a third-party supplier

- The supplier fulfills the order including packaging and shipping

Benefits of Dropshipping:

1. No inventory management:

One of the major hurdles of eCommerce business that Dropshipping solves is that of inventory management. Unlike the eCommerce businesses that are required to stock up their products and maintain their inventory, drop shippers are relieved of that burden. The drop shippers do not have to stock up on their products. The orders received are directly communicated to the supplier, and the supplier fulfills the order including packaging and shipping.

2. Low capital requirement:

Given that there is no requirement to manage any inventory, the capital required to foray into Dropshipping business is limited. You just get a website created. If you are a techie yourself or can learn to code, that cost can be saved as well. Dropshipping is especially beneficial to aspiring entrepreneurs looking to start a business with minimal investment.

3. Low overheads:

With dropshipping, you can run your business right from your laptop from your home or wherever you are. If you choose to, you might not even have an office.

4. Flexibility of automation:

Running a dropshipping store provides you the flexibility of automating the entire process. The process includes receiving the order from the customer and communicating it to the supplier. You can choose to execute this manually which would be time-consuming. You can automate the process instead. You can adopt a system through which the order is communicated automatically, and you can monitor the progress.

5. Increase in Online shopping:

According to the estimates of Nasdaq, consumers will be making 95% of their purchases online. If you are an aspiring entrepreneur, online shopping is one of the fastest-growing industries globally. The digitization wave has changed the way people shop. Online shopping is the future.

What is AliExpress?

If you are ready to foray into dropshipping, the first step would be to finalize the products you want to sell and their procurement. That’s where AliExpress comes in. AliExpress is one of the most popular online marketplaces and a part of the Alibaba group. While Alibaba is for wholesale purchases, AliExpress is made for small retailers and individual purchases. AliExpress makes a good option for sourcing your products.

Pros of AliExpress:

1. Products at a cheaper price:

One of the major benefits of sourcing products from AliExpress is the cost factor. As a dropshipping entrepreneur, you would look for ways to maximize your profit, and on AliExpress you will be able to procure the products at a much cheaper cost compared to other sources.

2. Excellent quality:

The suppliers on AliExpress are experienced in the field. Though some suppliers provide low-quality products (as with all other marketplaces), AliExpress makes it very easy for you to filter the top suppliers through the reviews and other parameters including the number of orders, feedback score, and feedback rating.

3. Flexibility of locations:

With AliExpress, you don’t have to worry about the fulfillment of orders from other countries. AliExpress provides delivery to almost all the countries.

4. More options in products:

According to an estimate, there are more than 100 million products available on AliExpress for you to choose from.

How to start AliExpress Dropshipping?

1. Choose your product niche or type of products you want to sell:

You will have to answer the biggest question on the card: “What will you sell in your store?”. You will have to determine the niche of products you want to sell. You can choose products you have the knowledge of or go with the trending products to increase the chances of your success. Don’t go with the lowest-priced products without verifying their quality.

2. Conduct a market and competitor research:

To become a successful drop shipper, the foremost thing you will have to do is market research. Check for the trending products through the latest trends section on AliExpress. Also, check for the market potential of the niche of products you want to enter. This initial preparation and research would help in the long run.

3. Set up an eCommerce website:

Another pivotal aspect of getting started on your journey of dropshipping is the website. You can either create a website from platforms like Shopify that provides you with the tools to create a website without any (or minimal) technical knowledge or choose to build it yourself from scratch, which might take a longer time depending on your expertise.

4. Use tools for Automation:

With drop shipping, you can make it an efficient process through automation. The most time-consuming aspect of the process is the procurement of products from AliExpress and adding them to your store. You can use automation tools to automate the procurement process and you can focus on growing your business.

What is AliScraper?

AliScraper is an integration offered by Spocket that helps you automate your procurement. It is an automation tool that eases the process of searching for products on AliExpress and importing bulk products. The features available on AliScraper make it easy for you to find and choose products and import them in bulk with just one click. It automates the most time-consuming process of your dropshipping journey, and all of this for FREE! AliScraper is available as integration for almost all the major platforms like Shopify, BigCommerce, Wix, Squarespace, Square, WooCommerce, etc. So, whichever of the above platforms you have your store on, AliScraper is available to you.

5. Choose the right suppliers:

One aspect that can make or break your dropshipping journey is the type of suppliers you choose. It is important as the fulfillment of orders is done by them. Stay cautious about ordering branded products from AliExpress as you might encounter suppliers delivering knock-off products. This wouldn’t be a great experience for your customer, and you run the risk of losing them. Choosing the right suppliers is pivotal for your success. Use the parameters available on AliExpress like reviews, number of orders, feedback score, and feedback rating to filter out the best suppliers, connect with them, and observe their responsiveness.

6. Frame the right descriptions for the products:

AliScraper can ease the process of finding the right products for you but a large part of your sales depend on how good the product descriptions on your platform are. The customers want to know the features and other attributes in detail to ascertain if it meets their needs. The products procured from AliExpress might lack a quality description. Hence, it is pivotal that you frame the right descriptions for your products to make them more appealing.

7. Check the payment methods:

The advantage of AliExpress over Alibaba is that it offers a Credit Card as an option to make payments unlike the latter wherein the suppliers may ask for wire transfers. Though Credit Card is the most preferred option, AliExpress also provides other methods that include:

- Wire Transfer

- Western Union

- Webmoney

- iDeal

- DOKU

- QIWI and many more

Connect with your supplier and determine the preferred mode of payment on their side to make payments for your orders.

8. Check the shipping method:

The shipping method and time taken for delivery are something that you need to be clear about from the initial phase. Since AliExpress is from China, the delivery time of standard shipping can go up to a month or even 60 days. It can be frustrating for your customers, given that a competitor service like Amazon can deliver the product by the next day.

Thankfully, you now have the option to choose ePacket shipping which would allow your customers to receive their orders in 12-14 days.

9. Order samples:

You should ascertain the quality of products and responsiveness of suppliers by ordering samples yourselves. It would be a great step to be assured of the quality of products that your customers would receive and help reduce returns and complaints.

10. Check for refunds and returns policy:

According to the statistics, the average rate of return for online purchases is 20.8%. Given this return ratio of 1:5, a clear understanding of the refund and return policies accepted by the supplier would be crucial. It would enable you to keep your customers informed and handle situations to provide a better customer experience.

Important points to have in mind:

1. Don’t go for the lowest-priced products.

2. Procure suppliers with higher positive feedback [preferably more than 90% rating]

3. Be cautious with branded products

4. Pay attention to the responsiveness of the supplier

5. Beware of false advertising: The products may turn out to be completely different than the ones in the images

6. You will have lesser control over the process and quality since the fulfillment is done by the suppliers

7. Lower profit margin

8. Liability of errors: You will be responsible for the actions of your suppliers.

Conclusion:

Dropshipping is a booming industry. The accessibility of smartphones has fostered the adoption of digital mediums, and online shopping has witnessed a sharp rise which has changed the way people make purchases. With the advantages that Dropshipping provides, it is a great career option if you are looking to foray into an online business. A tool like AliScraper helps you automate your procurement process and enable you to focus on business growth, thereby increasing your profit.

If you have any queries related to Dropshipping, feel free to post them in the comments below.